Holtz-Eakin: Health law will hurt innovation, ration care

Holtz-Eakin, now the president of the conservative American Action Forum, echoed the same critique in a policy paper set to be released Wednesday.

"Although rationing is an unpopular and ungracious term IPAB may bring Medicare dangerously close to a rationed system ... 'Rationing' will occur in complex and often subtle ways, and patients may never know that they could have received a more effective treatment," Holtz-Eakin wrote.

The paper reiterates familiar conservative arguments: because the IPAB will reduce Medicare's payments to doctors, some doctors will stop accepting Medicare patients, and thus seniors will have a harder time finding treatment they need.

The IPAB is statutorily prohibited from "rationing." It will not be allowed to change seniors' benefits or increase their cost-sharing. All the IPAB can do is cut Medicare's payments to doctors and certain other providers (hospitals are exempt) in any year that Medicare spending grows faster than a prescribed rate.

But that's exactly the problem, Holtz-Eakin said — because the IPAB is limited to cutting providers' payments, it doesn't have enough tools to avoid steep cuts that will trickle down to affect access and thus seniors' access to care.

(There are serious questions about whether the IPAB will even come into existence. Its board members must be confirmed by the Senate, and the Obama administration has had a hard enough time getting even its most uncontroversial nominees through, without being tied to the treacherous politics of the president's healthcare law. And a President Romney might simplt skip making any appointments altogether.)

Holtz-Eakin said the IPAB's cuts could also affect medical innovation.

"New medicines for conditions like Alzheimer’s or Parkinson’s will likely have rapid cost growth, especially early after their introduction on the market," he wrote. "That will make them targets as IPAB is directed to focus on areas of 'excess cost growth.'"

The exemption for hospitals, along with other structural issues, will likely limit the IPAB's purview to about half of all Medicare spending in its first few years, by Holtz-Eakin's estimates. He said those restrictions —while designed to guard against charges of rationing — will force the IPAB to cut more deeply where it's allowed to.